In one of the most inspiring messages we have ever seen Management, Mike Pearson has released a letter to Valeant Pharmaceuticals telling them his employees that there is no need to fear as the company is not going bankrupt. With the snark aside, Valeant Pharmaceuticals is now in survival mode and what happens next is unclear but there is a huge amount of pressure from all sides on the company and some of the largest shareholders. For those brave souls we offer a detailed long write up from some very shrewd value investors here.
See the full letter from Pearson to Valeant Pharmaceuticals employees below.
March 16, 2016
As you are probably aware, yesterday we announced fourth-quarter preliminary unaudited financial results on a call with investors and analysts. Clearly, there was an extreme market reaction to our financial update and our stock price realized a dramatic fall. I know that has caused many of you to worry about the health and future of this company. I want to assure you that our business is strong and I believe we are headed in the right direction.
First, I’d like to address an area that some have expressed concern over: whether the company is on the verge of bankruptcy. I can assure you we are not. The fears you might have read about in the press are tied to the delay in filing our 10-K financial report, which has deadlines that can trigger default of certain loans and bonds. This is a matter we are taking very seriously. We are working to extend the deadlines in our loan agreements, and I am confident we will be able to do so.
On the business side, all of the controversy over the past several months has clearly had an impact. The transition from Philidor hurt our results in the fourth quarter, and we are seeing other challenges in some of our businesses.
Our overall business continues to grow, but given the continued external pressure from managed care, the pricing environment and a slower-than-expected start to 2016, we are forecasting lower growth for some of our businesses, including U.S. dermatology – where we have transitioned from Philidor to Walgreens, gastrointestinal and women’s health, as well as certain geographic regions, such as Western Europe.
We continue to be encouraged by the strong growth in contact lenses, oral health, oncology, generics and some of our emerging markets. These are all great businesses that are delivering on their plans and generating cash. We’re also confident about our ability to get some of our businesses that have gotten off to slow starts in 2016 back on track, including prescription ophthalmology, Solta and Obagi.
Additionally, the Walgreens program is off to a terrific start. Within two months of launch, approximately 30 percent of our dermatology scripts are flowing through Walgreens – approximately twice the volume from when we started. More importantly, well over 90% of the physicians who were using Philidor are now using Walgreens and many new doctors are using the channel as well. We continue to fine tune the program and the next phase of the program, brand-for-generics, is on track for launch this summer.
Restoring the public’s confidence will take time and I want to apologize directly to each of you for the distractions this intense scrutiny is causing you. I know you want to wake up happy to come to work every day, and over the past few months, that has been difficult. Please know that I am working as hard as I can to turn things around, and I believe we will. I truly believe we have the right fundamentals in place: a great set of products and brands; loyal physicians, patients and customers, and most of all, you – our employees worldwide who are doing everything you can to provide important medicines to our patients and the doctors who depend on them. It is because of you that I’m confident we can get past this period of uncertainty, restore our reputation and make you all feel proud once again to work at Valeant Pharmaceuticals.
Thank you for all of your hard work. If there is anything you think we can be doing better, please don’t hesitate to let me know.